Bahia AM Renda Variavel Ltda. -- Moody's upgrades Bahia AM Renda Variavel and Bahia AM Renda Fixa Investment Manager Quality Assessment to MQ1
Announcement: Moody's upgrades Bahia AM Renda Variavel and Bahia AM Renda Fixa Investment Manager Quality Assessment to MQ1
Global Credit Research - 25 Jan 2021
Sao Paulo, January 25, 2021 -- Moody's América Latina has upgraded the Investment Manager Quality (MQ) Assessment of Bahia AM Renda Variavel Ltda. and Bahia AM Renda Fixa Ltda. (both under the brand name Bahia Asset Management) to MQ1 from MQ2. The MQ1 assessments reflect Moody's view of the asset manager as having excellent management characteristics. Bahia Asset Management is an independent asset manager, as of December 2020, its assets under management (AUM) totaled BRL19.3 billion (USD3.7 billion).
ASSESSMENT RATIONALE
The MQ1 assessment reflects the companies': (i) continuous improvement in investment management activities through investments in controls and systems, (ii) long term strong risk-adjusted performance of its funds relative to their benchmarks, (iii) significant growth in assets under management and (iv) low employee turnover in recent years. The MQ1 assessment also reflects the company's strong risk management processes and guidelines and the high level of expertise and qualification of its professionals. Moody's views the main challenges for the company to be: (i) continue to grow amid competitive landscape, (ii) retaining its highly qualified team of professionals, and (iii) improve the risk-adjusted performance of its funds.
Bahia Asset Management had a strong AUM growth over the years, and solid financial performance which has resulted in material retained earnings from performance fees. Bahia Asset Management has experienced a robust AUM growth, which more than tripled in the past years, despite challenging market conditions over this period.
Moody's considers that Bahia Asset Management's financial flexibility has improved given its expressive AUM growth, but is still limited given its modest size, from a global perspective. The asset manager has been in operations since 2011 and has been able to invest in infrastructure and hire professionals to maintain sound investment management activities.
Regarding Bahia Asset Management's investment performance, Moody's notes that the asset manager's funds have met their risk-return objective and outperformed their benchmarks. Overall, Moody's views the asset manager's investment performance to be consistent with an MQ1 assessment.
Bahia Asset Management's MQ1 assessment would face downward pressure if: (i) the company's funds risk-adjusted performance deteriorated relative to both peers and benchmarks, (ii) funds experienced a substantial decrease in AUM, or (iii) there were significant deviations from the firm's investment or risk management guidelines that increased operational risks.
Headquartered in Rio de Janeiro, Brazil, Bahia Asset Management is an independent asset manager that specializes in equities, commodities and derivatives. As of December 31, 2020, its total AUM amounted to BRL19.3 billion (USD3.7 billion).
The methodology used in these ratings was Investment Manager Quality Assessments of Asset Managers published in December 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1177533. Alternatively, please see the Rating Methodologies page on www.moodys.com.br for a copy of this methodology.
Please see www.moodys.com.br for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Diego Kashiwakura, CFA Vice President - Senior Analyst Financial Institutions Group Moody's America Latina Ltda. Avenida Nacoes Unidas, 12.551 16th Floor, Room 1601 Sao Paulo, SP 04578-903 Brazil JOURNALISTS: 0 800 891 2518 Client Service: 1 212 553 1653 Marc R. Pinto, CFA MD - Financial Institutions Financial Institutions Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's America Latina Ltda. Avenida Nacoes Unidas, 12.551 16th Floor, Room 1601 Sao Paulo, SP 04578-903 Brazil JOURNALISTS: 0 800 891 2518 Client Service: 1 212 553 1653
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